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ANDERSON COOPER 360 DEGREES

President Obama Urges Economic Patience; Change in U.S. Tactics Towards Mexico?

Aired March 24, 2009 - 22:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


ANDERSON COOPER, CNN ANCHOR: Tonight, President Obama hailing signs of progress in the economy, but also counseling patience and saying he would be persistent, laying out a budget to a country that has learned to think in terms of trillions of dollars and coping with the outrage over millions in bonus money for AIG fat cats, still wielding enormous popularity, but tonight facing growing resistance from congressional Democrats.

Tonight, the president was trying to talk around them, directly to you, the American people. In a moment, we will talk about how he did.

But, throughout the next hour, we want to be playing you clips, extended clips, supersized samples of the president, so, if you missed the news conference or maybe drifted off during it, we will bring you the most important parts.

Here is what the president said before he took questions, an extended clip of his opening statement.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The budget I submitted to Congress will build our economic recovery on a stronger foundation so that we don't face another crisis like this 10 or 20 years from now.

We invest in the renewable sources of energy that will lead to new jobs, new businesses, and less dependence on foreign oil. We invest in our schools and our teachers, so that our children have the skills they need to compete with any workers in the world.

We invest in reform that will bring down the cost of health care for families, businesses and our government.

And in this budget, we have -- we have to make the tough choices necessary to cut our deficit in half by the end of my first term.

You know, there was a lot of outrage and finger-pointing last week, and much of it is understandable. I'm as angry as anybody about those bonuses that went to some of the very same individuals who brought our financial system to its knees, partly because it's yet another symptom of the culture that led us to this point.

But one of the most important lessons to learn from this crisis is that our economy only works if we recognize that we're all in this together, that we all have responsibilities to each other and to our country.

Bankers and executives on Wall Street need to realize that enriching themselves on the taxpayers' dime is inexcusable, that the days of outsized rewards and reckless speculation that puts us all at risk have to be over.

At the same time, the rest of us can't afford to demonize every investor or entrepreneur who seeks to make a profit. That drive is what has always fueled our prosperity, and it is what will ultimately get these banks lending and our economy moving once more.

We'll recover from this recession, but it will take time, it will take patience, and it will take an understanding that, when we all work together, when each of us looks beyond our own short-term interest to the wider set of obligations we have towards each other, that's when we succeed, that's when we...

(END VIDEO CLIP)

COOPER: So, that's how the news conference began, before they started asking questions. When reporters started, some of the questions got tough tonight. The testy exchange was between our own Ed Henry and the president over AIG.

Joining me now, chief national correspondent John King, senior political analyst Gloria Borger, chief business correspondent Ali Velshi. CNN's Joe Johns is here with us, also political contributors Paul Begala and Alex Castellanos, from the left and right, respectively, and, as always, senior political analyst, David Gergen.

David, let's start with you.

We just heard the president say he was as angry as anybody about those AIG bonuses.

But -- but I want to play for our viewers what happened when Ed Henry pressed him on that and said, why didn't he express the anger earlier?

Take a listen.

(BEGIN VIDEO CLIP)

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Why did you wait -- why did you wait days to come out and express that outrage? It seems like the action is coming out of New York and the attorney general's office. It took you days to come public with Secretary Geithner and say, "Look, we're outraged." Why did it take so long?

OBAMA: It took us a couple of days because I like to know what I'm talking about before I speak.

(LAUGHTER)

(END VIDEO CLIP) COOPER: Clearly, David, the president was not eager to -- to talk a lot about AIG tonight. Was -- was part of what he was trying to do was move beyond that?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Absolutely.

And he was -- he was testy with Ed Henry tonight. He got a little short with him. And, you know, he -- he -- and I think he wanted to cut it off. I think he had two things, Anderson.

There's an embarrassment on the part of the administration. They realize they didn't handle this as well as they might have. But, secondly -- and very importantly -- at the end of his statement tonight, he said, we need to come together and let's stop -- you know, the bankers have to understand things, but let's not demonize every investor and entrepreneur.

That was a very important signal for him to send, because he's trying to persuade the business community to come and play ball with him now on this banking plan. And central to recovery is whether the Geithner plan that was presented yesterday, will it will work -- will it work or not? That's very central.

COOPER: John King, do you think he's been able to turn the corner on the AIG bonus issue?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: He wants to turn the corner to the budget issue and the bigger structural issues about the financial institution bailout, this new authority they want.

Has he been able to turn the corner? No, because they will continue to get asked some questions. If not in a press conference setting, then his team will get asked these questions when they go up to Capitol Hill, because there is an inconsistency that, in the eyes of many, the administration has not completely answered, which was that the language in the Obama stimulus plan that protected those bonuses was put there by the Obama Treasury Department.

And, so, how can you match -- match that up with the president of the the United States voicing outrage at these bonuses, when the language protecting them was put in by his administration?

And there's a big question. And I tried to ask his top economic adviser this past weekend, how could that happen? Why the disconnect? And she said, well, I can't explain the ticktock to you, or it serves no purpose to go back and do the ticktock.

There are many, especially the president's critics, who see a little bit of a political opening there who want to connect those dots.

COOPER: So, Alex Castellanos, from the right perspective, was the president accurate when he said, "I wanted to know what I talked about before I said it"?

ALEX CASTELLANOS, CNN POLITICAL CONTRIBUTOR: Well, I think, tonight we, saw the first hint, Anderson -- and it's only a small hint -- of a president who could be a one-termer.

We saw some impatience beneath the surface on this Ed Henry question, which I thought was entirely fair, you know, that, evidently, our educational system is not in as good a shape as we thought, because neither the Congress, the Democrats there, or the president could actually read the stimulus bill.

This is language that they wrote, that Congress voted for, and the president signed, and they still seemed to be shocked and outraged and angry even tonight that these executives at AIG took the bonuses that the Democrats and the president gave them.

COOPER: So, why -- why does this make him a one -- a one-termer, perhaps?

CASTELLANOS: Well, you know, there's a short step from self- confidence to arrogance.

And, tonight, we saw some impatience that lies not very deep beneath the surface of this president. This is a young president. This is a very confident president. But this is a president that doesn't really have a lot of economic experience. He's -- as far as creating prosperity himself. He doesn't really have that much political experience.

And, when tested tonight, we saw a little flash just under the surface -- again, small hint.

COOPER: I see...

CASTELLANOS: Look, this is still an incredibly popular guy and a gifted communicator.

But, in advertising, there's a saying. Nothing kills a bad product quicker than good advertising.

COOPER: I see David Gergen shaking his head, and I see Paul Begala grinding his back teeth.

(LAUGHTER)

(CROSSTALK)

COOPER: Paul, what do you think about what Alex just said?

PAUL BEGALA, CNN POLITICAL ANALYST: I mean, the guy is 64 days into the job. He's got about a 64 percent approval rating. And Alex is proposing that he's a one-term president.

Look, how about we give him what the American people gave him, a four-year no-cut contract? And, then, if he's a miserable failure at the end of four years, we will do like we did with Bush, and reelect him anyway.

(LAUGHTER)

CASTELLANOS: But, you know, George Bush -- when George Bush said...

(LAUGHTER)

(CROSSTALK)

CASTELLANOS: When George Bush said, it's hard work, it wasn't -- it was a laughing -- a thing that we could laugh about.

COOPER: We...

CASTELLANOS: Tonight, this president says, you know, it's hard work. It's OK when those things reach his desk.

COOPER: All right, we're going to have everyone get in on this.

We have got to take a short break, a lot more with our extended panel tonight.

Everyone is weighing in on the blog as well. I'm sure a lot of people want to talk about what Alex just said. You can, too, with the live chat at AC360.com. That's what that little chime was.

Coming up: more of the president in his own words, and how those words fit the facts. Are the figures the president is using when he talks about the budget, the estimates about recovery, are they too rosy? We're checking the facts, "Keeping Them Honest."

Then: The president today agreed to send more equipment, manpower to our border with Mexico to stop the drug war from spilling over here more. Michael Ware is recently back from the front lines -- his report coming up tonight.

And before he spoke to reporters, the president spent a little time away from earthly problems talking to astronauts in outer space.

(BEGIN VIDEO CLIP)

OBAMA: Were you tested to cut your hair shorter...

(LAUGHTER)

OBAMA: ... while you were up there?

UNIDENTIFIED FEMALE: It's a really good question, because it is a little bit of an overhead to take care of long hair here.

OBAMA: I think it's a real fashion statement.

(LAUGHTER)

(END VIDEO CLIP)

(COMMERCIAL BREAK)

COOPER: We're talking about President Obama's news conference tonight, the economy taking center stage, not doubt about that, not so much the anger over AIG. Instead, the budget, deficit, and national debt figured highly, the subject matter a bit wonky at times, the tone fairly somber, except for that exchange with Ed Henry. Take another look.

(BEGIN VIDEO CLIP)

HENRY: Why did you wait -- why did you wait days to come out and express that outrage? It seems like the action is coming out of New York and the attorney general's office. It took you days to come public with Secretary Geithner and say, "Look, we're outraged." Why did it take so long?

OBAMA: It took us a couple of days because I like to know what I'm talking about before I speak.

(LAUGHTER)

(END VIDEO CLIP)

COOPER: Ed Henry joins us now from the North Lawn of the White House.

Ed, he -- he basically dodged that question about AIG. But, in -- in dodging it, he -- he also sort of answered it.

HENRY: In a way, absolutely. That's what happens at these presidential press conferences.

Sometimes, you can ask a tough question. Even though you really don't get a direct answer, the fact that it's dodged, the fact that it's pushed in another direction can be very revealing. And it's clear from that moment, that quick exchange, the president got a little testy, and he clearly didn't want to talk about the subject of AIG.

I wasn't planning to bring that up. I had some other things in mind. But when I saw that none of my colleagues had brought up what had been the hottest story of the last week, I felt like he needed to answer that question. He clearly didn't.

He wanted, instead, to talk about how he believes he's going to turn the economy around, what he believes he's done already, and make his case for the budget.

What's fascinating, what you wouldn't have noticed at home is, that opening statement about the economy, he used a teleprompter, which tells you a lot as well. It shows that this president is very careful with what he says. He doesn't want to slip up.

During the Q&A portion, though, however, he doesn't know what's coming. And that's when you might get a spontaneous moment like we got tonight.

COOPER: A lot of people are talking about this on the blog at AC360.com. One of our viewers, Tim Marshall (ph), asked: "I have seen the president get angry a couple of times with reporters. Ed, what's your take on this?"

HENRY: I have not seen him get angry very much.

Every top aide that you talk to says that, in any big meeting they have -- put aside public events -- he's always the calmest, coolest person in the room. You hear that over and over, that, when they're dealing with these tough subjects in the financial crisis, he tries to keep level-headed, and a lot of staffers think that -- that helps them make key decisions.

But, in that moment, you saw a flash of anger. It's clear this White House no longer wants to talk about this subject. Instead, they want to talk about their budget. But I got news for you. That's not good news either for this White House right now.

What is the president doing tomorrow? He's going to up to Capitol Hill to meet, not with Republicans, but Democrats, to try to sell his own budget. That's because a lot of top Democrats are saying, how are we going to pay for all these initiatives on education, energy, health care, when the estimates are that this new budget plan could add $7 trillion or $9 trillion dollars in new debt -- $7 trillion or $9 trillion dollars?

It's staggering. And the fact that he still needs to sell it to fellow Democrats is very frustrating to this White House. It's going to be nail-biting vote on that budget in both the House and Senate -- Anderson.

COOPER: No doubt about that.

Let's dig deeper now. Back to -- Ed, you can nurse your wounds tonight.

(LAUGHTER)

COOPER: Back with Paul Begala, Alex Castellanos, David Gergen, John King, Joe Johns, Ali Velshi, and Gloria Borger. The whole team is here.

Joe, let's start with you.

Ed was talking about what Democrats on the Hill have done, slashing hundreds of billions from the president's budget. I just want to play a little bit about what the president said about that at the news conference tonight.

(BEGIN VIDEO CLIP)

OBAMA: We never expected, when we printed out our budget, that they would simply Xerox it and vote on it. We assume that it has to go through the legislative process. I have not yet seen the final product coming out of the Senate or the House, and we're in constant conversations with them. (END VIDEO CLIP)

COOPER: How concerned should the White House be that they now have problems from -- from Democrats on the Hill?

JOE JOHNS, CNN SENIOR CORRESPONDENT: They should be very concerned, because there are a lot of people on Capitol Hill right now, Republicans certainly leading the charge, saying, the president is trying to do too much; he has too many things piled on top of fixing the economy, specific, and what we're talking about, you know, getting jobs back on track, getting credit moving, and so on. And he also wants health care. He wants education, a variety of other things.

So, there are a lot of Republicans certainly leading the charge, now Democrats, like Kent Conrad, the chairman of the Budget Committee on the Senate side, and others, who are saying, this is a little bit too much to swallow, at least for now. We're going to pare it back just a bit.

How serious will it get? You never know. In that news conference, they talked about the president signing the budget resolution. The president doesn't have to sign that. It's a concurrent resolution with Congress.

So, at the end of the day, you know, it's just a blueprint and it's something they want. But...

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Yes, but the interesting thing to me was, he was talking about the middle-class tax cut, which was a signature of the campaign.

And what he seemed to be saying tonight was, the tax cut that's in the stimulus package, which is temporary, seems to be all he's going to go for right now, because he's -- he's kind of leaving that right there. He's not going to make it permanent, because he does want to do these other things, like health care, which he thinks is going to add to...

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: It's going to be very hard to do that with a tax cut.

BORGER: ... to add to economic security. Yes, you can't do it with a tax cut.

KING: And, in the short term, it's a sign, as Ed just noted, the president struggling to keep his own party line on the votes.

In the long term, they could end up doing him a favor. If they get the deficit to a lower point, if they have a smaller deficit in the end, but still give the president most of what he wants, and give him a framework for health care reform, give him a framework for the education priorities he wants, and maybe don't give him 100 percent on everything, but 80 percent on something and move him along, he's not going to be judged in four years on whether or not he got 100 percent of what he wanted. He's going to be judged on whether he keeps his big promises and the economy is coming back.

COOPER: Ali, I want to bring you in here.

Tim Geithner today, Bernanke on -- Bernanke on the Hill today, asking, basically, for more power to involve themselves and be able to take over some companies that aren't banks. Explain...

VELSHI: Right.

COOPER: ... what they want and why that's a new thing and a big deal.

VELSHI: When a bank is in trouble or a bank fails, the Federal Deposit Insurance Corporation steps in, the FDIC.

COOPER: FDIC. Everyone says that works.

VELSHI: Right.

They -- they come in. They shut the bank down. It usually happens on a Friday night. By Monday morning, you can go into that bank. It's either seized and run by the government or it's sold to someone else.

This has been one seamless operation over the last year. Plenty of banks have failed, no problem. The FDIC walks in. They look at every contract in the place, and, if they don't like it, they rip it up.

Now, the rest of the government doesn't have this sort of authority with the non-bank financial institutions. AIG is one of them.

So, what Tim Geithner is saying is that, for anything that is too big to fail, they want the ability to go in there, check out the risk, and have similar powers. And -- and, frankly, as much as some people see that as too much government control, you can't look at the FDIC over the last year and say, wow, that -- that didn't work.

COOPER: Alex Castellanos, do you see that as too much control?

CASTELLANOS: Well, I think -- I think there are a lot of Republicans here who are concerned about Washington taking control of too big a hunk of this economy.

It's not as if anyone thinks that Washington was doing such a great job before this meltdown occurred that, gee, let's put those guys in charge of not only the banks, the credit system, auto companies, energy, and health care.

So, yes, there's a tremendous amount of concern that the -- that the guys from Washington are here to help us again.

COOPER: David Gergen? GERGEN: I think Alex is right in the -- in general, that there's a lot of Republican concern, if you look across the board. And we didn't talk about tonight about autos, for example. There are big decisions coming up on that in the next week or so, just a few days away.

But, Anderson, on this particular issue that Bernanke and Geithner testified on about taking over, of having the government be able to take the non-bank financial institutions under control, I think there's pretty widespread agreement that that's a sound idea.

The FDIC, as Ali just said, has done a good job. We do have these other institutions now which are, in effect, too big to fail, but they're not banks. And the government -- and AIG has been one of them. And had the government been able to take over AIG much earlier -- they didn't have that power -- we wouldn't be in all these bonus problems we have been having here in the last week.

So, I think, on that particular issue, of these non-bank financial institutions, or the institutions too big to fail, I think there's pretty widespread agreement that something has to be done with more government control.

It depends on who is going to do it. You don't know what -- what institution in government -- in government.

COOPER: I want to bring in Paul Begala in a moment, Gloria Borger. But I have got to take a quick break.

Up next, we will have -- talk more to our panel, also, the president on patience and a look at what Americans can expect of him in the months ahead, what he says he will do if his plans go wrong.

And, later, Michael Ware, just back from the front lines in Mexico, his story, and President Obama's new plan to stop the bloodshed in Mexico from spilling over, more than it already has, into the United States.

And, in a bizarre note, the gloved one's stuff goes up for auction. Talk about a recession, including the gloves, even. See what else is on sale and why Michael Jackson, who hired the auction house, now wants to call the whole thing off -- that and more when 360 continues.

(COMMERCIAL BREAK)

COOPER: Taking a look at word cloud. You may be familiar with word clouds from the Web. We're pretty confident, though, this is the largest word cloud in the free world, not that the un-free world spends a lot of with word clouds.

(LAUGHTER)

COOPER: But it represents the words used tonight by the president and by those asking the questions, a lot of words dealing with the economy, the budget one of the biggest words, also going, as in going forward, going ahead, going to do, a word that relates heavily to the president's call tonight for patience and his promise that he would be persistent in tackling the big problems.

Listen.

(BEGIN VIDEO CLIP)

OBAMA: That whole philosophy of persistence, by the way, is one that I'm going to be emphasizing again and again in the months and years to come as long as I'm in this office. I'm a big believer in persistence.

I think that, when it comes to domestic affairs, if we keep on working at it, if we acknowledge that we make mistakes sometimes, and that we don't always have the right answer, and we're inheriting very knotty problems, that we can pass health care, we can find better solutions to our energy challenges, we can teach our children more effectively, we can deal with a very real budget crisis that is not fully dealt with in my -- in my budget at this point, but makes progress.

I think, when it comes to the banking system, you know, it was just a few days ago or weeks ago where people were certain that Secretary Geithner couldn't deliver a plan. Today, the headlines all look like, "Well, all right, there's a plan." And I'm sure there will be more criticism, and we'll have to make more adjustments, but we're moving in the right direction.

We haven't immediately eliminated the influence of lobbyists in Washington. We have not immediately eliminated wasteful pork projects. And we're not immediately going to get Middle East peace. We've been in office now a little over 60 days.

What I am confident about is that we're moving in the right direction and that the decisions we're making are based on, how are we going to get this economy moving? How are we going to put Americans back to work? How are we going to make sure that our people are safe? And how are we going to create not just prosperity here, but work with other countries for global peace and prosperity?

(END VIDEO CLIP)

COOPER: (AUDIO GAP) Paul Begala, Alex Castellanos, David Gergen, Joe Johns, Ali Velshi, Gloria Borger, and John King.

Paul, let's start off with you.

You know, it's an oft-asked question, and maybe it's become a cliche question at this point, but is the -- is the president overexposed here? I mean, he seemed tired tonight. David Gergen, for a long time, has been saying, this administration has got to get more people who can front for this administration, explain what this administration wants to do.

Tim Geithner, when he talks publicly, the markets tank. And, you know, Larry Summers is maybe great behind closed doors, but, you know, he's not about to get a cable news show.

(LAUGHTER)

COOPER: You know?

CASTELLANOS: Not this one.

BEGALA: Something to which I -- to which I know he aspires.

COOPER: Yes.

(LAUGHTER)

(CROSSTALK)

BEGALA: The -- the truth is, there -- there are many horses in the stable, but there's only one Secretariat, OK?

And I saw my buddy Rahm on "LARRY KING," did a great job. I saw Dr. Romer on John King's show on Sunday. She did a great job.

Larry is actually, I think, getting a lot better. Peter Orszag, the budget director, is out a lot. But they're -- and, by the way, the vice president of the United States is a pretty good public commentator as well.

But there's no one like him. And I -- I will become worried in a year or so if they continue this pace. They cannot keep this pace up. But I think they have a very strong sense that they are trying to address multiple crises simultaneously.

Frankly, this is a much more complex media environment than even Bill Clinton had, or Ronald Reagan, or certainly FDR, right? So, there are 500 channels going on.

And I thought that rumination at the end -- you know, he was asked about the Israeli-Palestinian problem, and he went off on this interesting meditation about persistence and why he believes in it, that clip you just played.

I think it's a real window into his soul. He wants us to hang in there with him. When he says that we need to be persistent, he means, we have got to hang in there with him over time. This country did hang in with FDR all through the Great Depression. Even though things were still bad, they were getting better.

And I don't know if we have that kind of culture anymore. You know, we watch home makeover shows where an entire house is rebuilt in 30 minutes after the commercial break.

(LAUGHTER)

COOPER: But, OK, well...

(CROSSTALK)

BEGALA: You know, so, I don't know if we have that attention span anymore.

COOPER: David Gergen, since Paul Begala brought up a cheesy TV show, I will bring up another one, "Who Wants to Be a Millionaire."

(LAUGHTER)

COOPER: Remember, when it first started, everybody loved it, couldn't get enough about it. It was in prime time on ABC. And they overplayed it. They played it every single night, it seemed like, and, finally, people just got sick of it. And -- and that brand was basically destroyed for a long time.

Does the president risk being overexposed?

GERGEN: Yes, he does. And I think he's right on the edge. He's been playing on the edge.

I think Paul Begala is right. He is the Secretariat of his administration. But you don't want to work out Secretariat and put him in a race every day. You need to bring other horses to the track.

And I don't -- I do think that they have not yet developed a series -- a set of voices on economic policy, in particular, that can generate confidence.

Now, maybe Tim Geithner made a turn yesterday in his fortunes. Maybe he's on a comeback trail and he will be out there more. But they do need more economic spokesmen.

I want to say one other thing, though. I do think Paul is right. I thought his meditation about persistence was the best part of his press conference. It was really important.

And I -- what I sensed, Anderson, tonight was, this was a man who is also starting to lower his own expectations a little bit. He's beginning to realize he's not going to get everything he wants this year from the Congress, and maybe not even with economic recovery.

So, he's saying, you have got to be in with me for the long haul.

I thought he lowed his sights tonight on what he's going to get out of the budget, for example.

COOPER: About 30 seconds, Gloria.

BORGER: Well, and let me raise another issue here about President Obama being out there.

I think this may well be about him, and not so much his advisers. This is somebody who talks about persistence. We have seen him over the last two years come from 20 points behind in the primaries to win the presidential race. He is persistent. He wants to let the American public know he's on top of this problem.

And the way he feels he can do it is talking directly to them. And I think he enjoys getting out of the bubble in the White House. COOPER: No doubt about that.

We're going to have more from our panel.

A lot of promises from President Obama tonight, but -- but can he deliver? And -- and the facts he's using, are they accurate? Tom Foreman tonight is "Keeping Them Honest."

Also, the U.S. taking on Mexican drug cartels, moving in money, resources to the border, more agents sent today to try to combat the violence, to keep it from spilling across the border, more than it already has. The Justice Department says Mexican drug cartels are the largest organized crime threat in the United States already. We will take you inside the war next door -- coming up.

And, Houston, we have got a phone call. President Obama talks to astronauts in outer space. It's our shot of the day.

We will be right back.

(COMMERCIAL BREAK)

COOPER: Today President Obama defended the stimulus plan with extremely detailed -- some might even say wonkish -- answers to reporters' questions. From the deficit to bonus outrage, the questions on Iran, he threw out a lot of facts and figures, but was he on the money?

Tom Foreman tonight is "Keeping Him Honest." He joins us now from D.C. -- Tom.

TOM FOREMAN, CNN CORRESPONDENT: Hey, Anderson.

Democrats and Republicans are challenging the president's budget numbers. And he was asked about the idea of a ballooning deficit. He continues to say that he's going to hit the sweet spot, rebuilding the economy while cutting the deficit in half. Listen.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: At the end of the day, the best way to bring our deficit down in the long run is not with a budget that continues the very same policies that have led us to a narrow prosperity and massive debt. It's with a budget that leads to broad economic growth, by moving from an era of borrow and spend to one where we save and invest.

(END VIDEO CLIP)

FOREMAN: The Congressional Budget Office, however, does not seem to buy that that's the direction we're going. They CBO predicts across the board less growth and more spending than the White House does. Now, that's pretty common for the CBO.

But nonetheless, they say the deficit this year will spike somewhere around one and three-quarter trillion dollars. That's four times higher than last year. The fact that it's pushing up so high might let the president indeed cut it in half before his term ends, but it would still be almost twice as big as it was in 2008. And the CBO predicts explosive growth in the deficit could come on the heels of his first term if he gets all the programs he wants into place -- Anderson.

COOPER: Tom, the president brought up his recent overture to Iran. Let's listen to that.

(BEGIN VIDEO CLIP)

OBAMA: When it comes to Iran, we did a video sending a message to the Iranian people and the leadership of the Islamic Republic of Iran. And some people said, "Well, they did not immediately say that 'We're eliminating nuclear weapons and stop funding terrorism'." Well, we didn't expect that. We expect that we're going to make steady progress on this front.

(END VIDEO CLIP)

COOPER: What did they say? What was the reaction?

FOREMAN: Well, the reaction was not quite as muted as that. The president can certainly take credit, Anderson, for the overture. And any diplomat will tell you building relationships, especially with an enemy, can take a long time.

But Iran did not simply refuse to drop their nuclear program. The supreme leader, Ayatollah Khameini, essentially said, "Put up or shut up," saying he believes President Obama is continuing antagonistic policies toward Iran, despite his word.

Now some people say this is because of internal politics in Iran that he said that. Nonetheless, the president may wish for steady progress, but his first effort produced no real signs of that any time soon, Anderson.

So the president, a lot of hopeful talk tonight, but other people would say there's a little bit more to the equation in some of the things he said.

COOPER: Well, throughout the hour the president expressing the term patience. Talking about the need for patience going forward. Tom, thanks for that.

Tonight, joining me again, let's just call them the supersized panel: John King, Gloria Borger, Ali Velshi, Joe Johns, Paul Begala, Alex Castellanos, and David Gergen.

Gloria, you said that the president really needed to try to connect the dots tonight. What do you mean, and did he do it?

GLORIA BORGER, CNN POLITICAL ANALYST: I think he has to give the American public a clear narrative: "This is what I've done. I've done the housing plan. I've done the stimulus package. Now I've done the bank bailout. Now we've got to do the budget." Needed to really try and garner support for the budget.

And then explain to them why these other issues are so important, like health care and energy to getting us out of the economic mess. That's where I think his problem is in connecting the dots, Anderson.

ALI VELSHI, CNN CORRESPONDENT: You set up that bar, and I agree with that.

BORGER: Yes.

VELSHI: And you know what? He didn't need that. They still haven't done that.

BORGER: It's going to take a long time. If you look at our polls, he's very popular. His program's a little less so. People are skeptical, because by the way, they watched that health-care debate. Nothing happened on health care. They know these are very difficult problems.

COOPER: So where does the battle now lie? I mean, in the next couple days, what is -- what happens on Capitol Hill?

JOE JOHNS, CNN CORRESPONDENT: He has to go up to the Hill, for one thing. He has to talk to Democrats. He has to try to make sure Democrats are all on board with all of these big ideas.

You know, one of the things you talked about and she talked about was how visible he's been. This guy has got to sell this thing. I mean, nobody else is going to do it for him. And a lot of presidents -- Ronald Reagan was very effective at -- effective at it.

When you want to get your message out, you don't let them chop you up into little tiny sound bites. You go around the message machine, go straight to the public, sit in the interviews, and just talk. And that's what this guy is trying to do.

JOHN KING, CNN CORRESPONDENT: And remember, when we say Democrats, not all Democrats are alike. They're not alike philosophically, ideologically. They're not from the same parts of the country.

There are a lot of Democrats out there from Southern Indiana, from Colorado, from Missouri, who have to win in more conservative electorates. And so the deficit number will matter.

If the perception is that you have a big spending Democratic administration, a liberal, big spending, raising taxes, running up red ink administration, that is very tough for them.

And they are on the ballot, Anderson, in any event, in two years, in 2010. They don't have the luxury of time that President Obama has down the road. So it is a concern for them.

COOPER: We got another question from the AC360 live chat, from the blog. It's from Farouk (ph). It's to Ali. Farouk (ph) says, "The president is saying that he's going to cut the deficit by half by the end of his first term. He's talked about the new programs he's adding to increase the size of the budget. But he hasn't addressed how he's going to cut the deficit by half. He's simply saying he will. Can you please advise what his program is to cut the budget? Or did I miss something in the coverage?"

VELSHI: No. Thanks, Farouk (ph), for asking the toughest question.

JOHNS: Cap and trade.

VELSHI: The deficit is the difference between how much the government takes in and how much the government spends. And in -- a deficit is when you spend more than you're taking in.

Now, this budget deficit for this year is going to be somewhere about four times what the previous one was, probably close to $1.34 trillion. Now, you add up all the deficits, and you have the national debt, which is now at about $11 trillion.

Now, the thing is, what the president is talking about is bringing that deficit down over the next several years to half of where it is, ultimately to about $500 billion a year. But that is still a $500 billion shortfall from where they are.

The way you deal -- and John touched on this earlier. The way you deal with deficits is either you take in more money, and that means that things are prosperous and people are paying more taxes, or you cut your spending. Same way that an individual would do that.

The issues hinges on how much the White House believes this economy is going to grow. The CBO, which is nonpartisan, feels that the economic growth is not going to be as strong as the White House does. If the White House is right, President Obama may get his way and cut that deficit. If they're not, it could take a lot longer.

COOPER: Only have a few seconds left. Paul Begala, for the next -- where does the now -- where does the battle lie for the president? What has he got to do in the next couple of days, couple of weeks?

PAUL BEGALA, CNN POLITICAL ANALYST: It lies on Capitol Hill, which is why that's exactly where the president is going. As John King has pointed out, he's going to meet with the Democrats tomorrow, Senate Democrats, and there are some very skeptical folks there.

I think what he's going to do, though, is try to press this point that there's really no alternative. One of the reasons we're all sitting here critiquing the Obama plan is because it's the only plan in town. There is not a Republican alternative budget. There very often is from the party out of power. And this time around there is not.

And I think the Democrats are going to have to just take a look and say, "Well, compared to what." Henny Youngman used to say it. If they asked him, "How's your wife?", he'd say, "Compared to what?" You know, how is the Obama budget? Well, compared to what?

COOPER: David Gergen, briefly, for you, where does the battle lie?

DAVID GERGEN, CNN POLITICAL ANALYST: Well, on the budget, I think he's going to have to accept compromises, because the Congress, in making its determination of how much things cost and how big the deficits are, is governed by the Congressional Budget Office numbers.

So if they just accept the Obama budget as it is, they'll be embracing a huge deficit as far as the eye can see, nearly a trillion dollars a year. They will not do that. They will bring it down.

COOPER: We're going to have to leave it there. David Gergen, Alex Castellanos, Paul Begala, John King, Gloria Borger, Ali Velshi, Joe Johns, thanks very much.

Next on 360, President Obama's message to Mexico's drug cartels, his plan to help our neighbor win the deadly war and how Mr. Obama intends to keep the violence from spreading across the border more than it already has. We're heading to Mexico tomorrow. We'll talk about that, coming up.

Later, the president's first call to space, a very long distance phone call that included some pretty funny one liners, had the astronauts cracking up. Here's one example.

(BEGIN VIDEO CLIP)

OBAMA: I'm told that you're cruising at about 17,000 miles per hour. So, we're glad that you are using the hands-free phone.

UNIDENTIFIED MALE: President, we go around the planet once every 90 minutes. It's quite a thrill.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

COOPER: Will more money and manpower keep the war next door from spilling over? President Obama certainly hopes so. He announced a sweeping new security policy today. Here are some key details: $700 million will be given to Mexican law enforcement to help battle the drug cartels. The Mexican army will use some of that money to buy five helicopters and new surveillance aircraft.

Here at home, hundreds of federal agents will be added to the southwest border to stem the flow of money, drugs, and guns and to prevent the violence from spreading into the U.S.

Now, here's what the president said about the situation earlier tonight.

(BEGIN VIDEO CLIP)

OBAMA: President Calderon has been very courageous in taking on these drug cartels. We've got to also take some steps, even as he is doing more to deal with the drug cartels, sending drugs in the United States. We need to do more to make sure that illegal guns and cash aren't flowing back to these cartels. That's part of what's financing their operations. That's part of what's arming them. That's what makes them so dangerous.

(END VIDEO CLIP)

COOPER: Well, the White House says the president is particularly concerned about the bloodshed in two Mexican border cities, Tijuana and Juarez. Both communities have been ripped apart by the cartels.

Michael Ware recently traveled to Juarez, the front lines, where as you'll see, Americans are also being targeted for death. Here's his report.

(BEGIN VIDEOTAPE)

MICHAEL WARE, CNN CORRESPONDENT (voice-over): This is how American Jose Molinar knew his wife was dead. He saw these television pictures of her bullet-riddled car broadcast from just across the boarder in Juarez City, Mexico, minutes from his Texas home.

JOSE MOLINAR, WIFE MURDERED: As soon as the image came up, I saw her truck, and I knew what had happened right then and there.

WARE: His wife, Maricella (ph), a U.S. resident and mother of two, was gunned down, doing a last-minute favor, giving a Juarez government lawyer a ride to go shopping.

MOLINAR: Wrong place, wrong time. That's the only way I can describe that.

WARE: Maricella (ph) died close to the border crossing, just yards from U.S. soil. It was her passenger who was the gunman's target. He was shot multiple times. She was killed by a single shot to the chest.

This is the cartel war in Mexico, a conflict raging on America's doorstep, a conflict in which Juarez police officers like this one, under attack from a drug gang, are fighting for their lives, while the drug cartels are battling throughout the city for control of a lucrative drug route into the United States.

Sixteen hundred people killed in this city last year. That's three times more than the most murderous city in America, and 50 of them were police officers. This year, in just two months, 400 more already murdered.

We saw the most recent victims laying in the city's morgue, overflowing with bodies, many unidentified cartel members destined for mass graves. They'd been brutally killed by rivals: beheaded, tortured, strafed with bullets.

But now the cartels are renewing a favorite tactic: intimidating government leaders. This time they're doing it by killing cops one by one.

MAYOR JOSE REYES FERRIZ, CIUDAD JUAREZ, MEXICO: They started killing police officers, and not while they were doing police work but when they were coming out of their homes and -- and getting into the cars to go to the police station.

WARE: This sign says it all: a cartel vowing to kill one person every 48 hours until this man, the chief of police, stands down. At first he refused to go, until, on one of the days when we were there, and he finally had enough, after the cartel had killed eight of his officers in less than a week.

In the hours following his resignation, we rode on patrol with police officers out on the streets, the entire force on high alert, the cartel war grinding on.

(on camera) And it's going to be a long war with most of the advantages in the cartels' favor. Their gunmen outnumber these police, and they're better armed. And the body count continues to rise.

(voice-over) Now the mayor's family is being targeted, a cartel threatening to behead them wherever they are. Police in the U.S. suspect the cartel is planning to cross into Texas to get to the family where they're hiding.

Over the past year, the Mexican army has moved in. Over 7,000 soldiers sent to Juarez as part of a huge operation that has 45,000 troops combating the cartels across Mexico.

"This is not going to be won quickly," says Mexican government spokesman Enrique Torres. "While we know the monster is big, we don't have any idea just how big it is."

And though the U.S. this year is giving Mexico about $400 million to combat the cartels, officials on both sides of the border privately agree. The war, as it's fought now, cannot be won, which is something Jose Molinar's wife probably knew before she was gunned down.

(on camera) This drug war in Juarez robbed you of your mother. I mean, how do you carry that?

ALBA PRIETO, MOTHER MURDERED: Day by day, just I always think she's at work.

WARE (voice-over): And the unwinnable war that killed her mother rages on.

Michael Ware, CNN, Juarez, Mexico.

(END VIDEOTAPE)

COOPER: There is so much pain.

We're heading to the border tomorrow to report live on the surging Mexican drug violence and the danger it's posing to all of us. That 360 special, "The War Next Door," begins tomorrow at 10 p.m. Eastern. We're also going to be there Thursday night, as well. Two nights. Let's check on some of the other stories we're following tonight. Tom Foreman is here with the "360 Bulletin" -- Tom.

FOREMAN: Hi, Anderson.

The FBI says it has broken up one of the country's largest auto theft rings, arresting 17 people in Chicago, Florida, and Mexico. Suspects are accused of, quote, "cloning cars" using legitimate license plates and vehicle identification numbers to make stolen cars look legal.

The ring has operated in the U.S. for more than 20 years, so happy anniversary.

Stocks retreated today following Monday's big rally, the best in four months. The Dow lost 126 points, the NASDAQ down 39, S&P fell 17. Technology and bank shares led the sell-off.

Rescuers pulled three people from the ocean after their fishing boat sank off New Jersey's coast. Only one victim survived, however. Four others remain missing. All seven were wearing cold-water survival suits. It's not clear how long they were in the icy waters.

And Michael Jackson's crystal-encrusted gloves are on display in Times Square, part of a traveling preview of some 2,000 items belonging to the King of Pop: sequined jackets, a crown, a letter from Ronald Reagan, even his socks. It all goes on the auction block next month, unless Jackson has his way. He's now suing the auction house he hired to conduct the sale. Always a drama there, Anderson.

COOPER: Yes, always a drama indeed.

Still ahead, Tom, the afternoon conference call that left President Obama and a room of congressmen feeling like a bunch of kids. The president chatting, cracking jokes with astronauts aboard the International Space Station and shuttle cockpit. We'll be right back.

(COMMERCIAL BREAK)

COOPER: All right, Tom, let's check out tonight's "Shot": President Obama fielding questions -- well, before he fielded questions in the press conference tonight, he was the one looking for answers during a phone call with the astronauts at the International Space Station and the Discovery shuttle.

As you'll see, the president had a couple jokes for the crew. Watch.

(BEGIN VIDEO CLIP)

OBAMA: I'm told that you're cruising at about 17,000 miles per hour. So we're glad that you are using the hands-free phone.

You guys still drink Tang up there? That's, by the way, before the time of you young people. Now can I ask you a question? Were you tempted to cut your hair shorter while you were up there?

UNIDENTIFIED FEMALE: It's a really good question, because it is a little bit of an overhead to take care of long hair here.

OBAMA: I think it's a real fashion statement.

(END VIDEO CLIP)

COOPER: Helping the president out with the questions were Washington, D.C., school kids and some members of Congress. Discovery undocked from the space station tomorrow and is expected to return to earth on Saturday.

I think I would probably cut my hair before going into space like that.

FOREMAN: Yes. Not a bad idea. That's probably about as far away as he wanted those reporters tonight.

COOPER: That's probably true. Exactly. He probably wished he was speaking through one of these phones, too.

FOREMAN: Good night (ph).

COOPER: Yes, Tom. Thanks very much for your (UNINTELLIGIBLE) work tonight. Appreciate it.

You can see, of course, all the most recent "Shots" at AC360.com.

And that about does it for this edition of 360. Thanks very much for watching. After the break, the president's news conference from beginning to end. Well repeat overnight as we do. See you again tomorrow from the Mexican border. Join us.

(COMMERCIAL BREAK)